The Securities and Exchange Commission reportedly has issued a subpoena to Senate Majority Leader Bill Frist regarding stock he owned and sold in the hospital company founded by his father. Frist has said his assets were in a blind trust, but it now appears he held some of the stock outside the trust.

MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

Published reports today say that the Securities and Exchange Commission has issued a subpoena to the leader of the Senate's Republican majority, Bill Frist. Both the SEC and the US district attorney's office in the southern district of New York are investigating Frist. The senator sold off stock in his family's hospital business right before that stock's price took a dive. Here's NPR's David Welna.

DAVID WELNA reporting:

Asked by NPR if it's true Senator Frist has had his personal financial records subpoenaed, an SEC spokesman replied, `No comment.' Asked the same question, Frist's spokesman, Bob Stevenson, e-mailed a carefully worded statement. `Senator Frist,' he wrote, `has been fully cooperating with the authorities conducting the inquiries and will continue to do so, including keeping our public comments to a minimum. As for the reported subpoena,' he said, `the issuance of a subpoena would be an expected and normal part of that process.'

Experts say it's clear the SEC would have to issue a subpoena in order to probe Frist's sell-off last summer of his holdings in HCA, the nation's largest for-profit hospital chain founded by Frist's father and brother. Therese Pritchard is with the New York securities enforcement law firm Bryan Cave and is a former assistant director of enforcement at the SEC.

Ms. THERESE PRITCHARD (Bryan Cave): What they'll do is they'll take a look at phone records. They'll take a look at what information was available at the company at the time he placed his order. They'll take a look at who he spoke to at the company or perhaps--I understand his relatives are potentially in senior management, so they may look at their phone records as well to look for communications at or about the time that HCA was realizing that it wasn't going to meet its financial projections.

WELNA: Frist insists no insider information prompted him to sell off his stock in HCA barely a week before a negative earnings report caused the price to drop 9 percent. Instead Frist told reporters late last month he was simply responding to those who've questioned his pushing legislation benefiting HCA, such as limiting medical malpractice lawsuits.

Senator BILL FRIST (Republican, Tennessee; Majority Leader): The cause of these continuing questions and looking ahead at my final years in the Senate and what might come next, I have for some time wanted to eliminate even the possibility of an appearance of a conflict by totally divesting of any HCA stock in my family's trust.

WELNA: For years Frist insisted he had no idea whether he still owned any stock in HCA, since he put his investments into what the Senate calls a qualified blind trust. But Frist did know he owned a large amount of HCA stock when he set up that trust. And Washington University law Professor Kathleen Clark says there appears to have been no basis for Frist's earlier claims that he did not know whether he still had HCA stock in that blind trust.

Professor KATHLEEN CLARK (Washington University): When the assets are put there, as far as the senator, in this case, knew, the assets remained there. So there wasn't anything blind about it. He knew he had HCA stock in the, quote, "qualified blind trust." And he knew it hadn't been sold yet because if it had been sold, if the trustee decided to sell it, the trustee would have notified him.

WELNA: Frist also knew he held HCA stock in a separate family trust managed by his brother. In recent years he reported earning more than a quarter million dollars in dividends from those holdings. None of those holdings, Clark says, were illegal, nor were they unethical if you go by Congress' standards.

Prof. CLARK: The ethics rules in Congress make it clear that there's nothing illegal about someone in Senator Frist's position from pushing legislation that will benefit him and his family financially, as long as other people in the health care field will also benefit from it.

WELNA: The irony for Senator Frist is that in trying to clear up lingering questions about his holdings, in anticipation of a possible presidential bid, he's raised even more questions about his finances and his presidential hopes. David Welna, NPR News, the Capitol.

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